|
CIMB Dutech Holdings Limited Positive business developments brewing ■ We visited Dutech’s two production plants in Nantong, China and came back with a positive view. We note two positive developments that are likely ongoing. ■ We understand that Dutech is in negotiations with a reputable automotive player on a major manufacturing contract, which may materialise by end-FY16F. ■ We believe that the group is in the process of embarking on another overseas M&A. ■ Reiterate Add with unchanged TP of S$0.61, based on CY16F DCF (WACC: 13%). |
UOB Kayhian REITs − Singapore Hospitality: Golden Week, Likely Meek Amid the global hubbub surrounding the commencement of China’s National Day Golden Week, Singapore hoteliers may have less to cheer for. The average length of stay for Chinese visitors, Singapore’s largest source market, has deteriorated rapidly since 2014. This coincides with the sharp increase in cross-border (Malaysia-Singapore) travel. We prefer geographically-diversified hospitality stocks (ART, FHT) over Singapore-centric ones (CDREIT). Maintain OVERWEIGHT. |
|
MayBank Kim Eng Singapore Property Tightrope for Developers Remain cautious on developers We continue to see a difficult operating environment for property developers. Aggressive land bids could lead to narrow margins if prices are not raised. Even though construction and financing costs have fallen, their declines may not be enough to offset costlier land. While developers could try to raise ASPs, we do not rule out more hawkish policies from the government to stamp out any revival of home prices. And while developers under our coverage have not overpaid in recent land bids, it remains onerous for them to replenish land banks. Remain NEUTRAL on them with CAPL (BUY, TP SGD3.93) as our preferred exposure. We think diversified players with strong recurring income could outperform. |
OCBC
Sheng Siong Group: Defensive business and decent yield No major issues from The Verge Competition remains keen Defensive business Sheng Siong Group’s 45k sq ft store in the Verge may likely close, albeit timeline with regards to any redevelopment plans of the mall is unclear for now. Nonetheless, revenue contribution from this store has not been significant. Inevitably, competition remains keen for the local grocery sector, yet against this backdrop, we continue to see overall revenue growth next year for the group being driven by nine new stores while renovation of older stores would also typically boost sales growth. We reviewed our estimates and raised our EPS estimates slightly, as well as updated assumptions for our DCF model, thus our fair value estimate increases from S$1.07 to S$1.15. While the share price has had a good run up, based on potential return including dividends, we keep our BUY rating on the stock. We still like the stock for its defensive business, sustainable margins, net cash position, and decent yields vs. the consumer sector.
|
